Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to

Question

Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income Werner Company produces and sells disposable foil baking pans to retailers for $2.75 per pan. The variable cost per pan is as follows: Direct materials Direct labor Variable factory overhead 0.53 Variable selling expense 0.12 Fixed manufacturing cost totals $111,425 per year. Administrative cost (all fixed) totals $48,350 Required: 1. Compute the number of pans that must be sold for Werner to break even. Break-even units 145pans 2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent. Unit variable cost Unit variable manufacturing cost s 1.5: Which is used in cost-volume-profit analysis? $0.37 0.63 1.6! Unit variable cost 3. How many pans must be sold for Werner to earn operating income of $13,530? 157 pans 4. How much sales revenue must Werner have to earn operating income of $13,530? 433 X

Explanation / Answer

Selling Price 2.75 Direct Material 0.37 Direct Labor 0.63 Variable FOH 0.53 Variable S&A 0.12 Total Cost 1.65 Contribution Margin 1.10 Contribution Margin Ratio 40.00% (CM/Sales) 4 Fixed Costs: Manufacturing Cost 111425 Administrative Cost 48350 Total FC 159775 Target Operating Income 13530 A Total Contribution Margin Required 173305 B Contribution Margin Ratio 40.00% A/B BEP Sales Dollars 433262.5

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